City officials trade barbs over Rivington deal, but little is revealed

Officials from Mayor Bill de Blasio's administration were grilled for six hours by the City Council on Thursday about the complex web of actions they took part in that led to a community health care facility being sold to a luxury condo developer, subsequently touching off one of the biggest snafus of this administration.

The Council hearing was mostly civilized, as members drilled down on technical details of the complicated land use transaction, and first deputy mayor Tony Shorris maintained a cool demeanor during his testimony. But tensions flared several times, boiling over when the Governmental Operations Committee chair, Ben Kallos, accused the administration of misleading him as to why Shorris’ time at the hearing would be limited to two-and-a-half hours.

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Staffers traded barbs after Shorris departed, with Council officials insisting they were told by City Hall Shorris would be traveling to Oklahoma for a mayoral conference. City Hall officials disputed the account, demanding an apology for Shorris.

During his testimony, Shorris expressed contrition and frustration about the outcome of the city-approved sale of the Rivington House — a formerly city-owned building that was sold to a nonprofit AIDS residence in the 1990s, and resold for $28 million to a for-profit nursing home operator last year. It is now slated for luxury condos.

"I want to state from the outset that I recognize that what happened here was not the right outcome for the community and taxpayers, nor was it consistent with the policy goals and values of the de Blasio administration," Shorris said during his opening remarks.

"This outcome is one for which I am ultimately accountable. All I can say is I am very disappointed with what happened," he added.

The nursing home company, Allure Group, succeeded in persuading the Department of Citywide Administrative Services (DCAS) to remove deed restrictions requiring the building to remain a nonprofit health care facility. Three months later, after paying a $16.1 million fee to remove remaining requirements, Allure sold the site for $116 million to Slate Property Group, which is preparing the condo development.

During the hearing, members pressed Shorris on why the deed restrictions were lifted, how much he and his staff knew about the matter during their first two years in office, whether he ever communicated the city’s preference to maintain a nursing home to DCAS and why the agency commissioner subsequently left her job.

“Trying to assign lines of responsibility for the removal of the deed restrictions at 45 Rivington St. is a little like playing a game of Whac-A-Mole: Just when you think you’ve hit that line of responsibility, it shifts and it seems to move someplace else,” Brooklyn Councilman Vincent Gentile said in his opening remarks.

He said that the various city agencies that played a role in the fate of the nursing home all point to one another to explain the ultimate outcome, which first came to light in published reports in March but had been a source of community concern for months prior.

“It seems like when each (city agency) is viewed individually … all in some way tell you what they did almost with blinders on that led to the lifting of both restrictions on Rivington,” he said. “It is almost as if each of these entities were all passengers on the same bus that was headed straight for lifting the deed restrictions, but ignoring the stop signs.”

“But the questions we have boil down to this: Who was driving that bus?”

Shorris subsequently answered a litany of questions that shed some light on the matter but largely reiterated the findings of two previous reports made public by the city’s Department of Investigation and Comptroller Scott Stringer.

Shorris acknowledged he and his staff were aware VillageCare, the original owner, wanted to sell the deed-restricted property shortly after de Blasio took office in 2014 because the nonprofit repeatedly contacted the city about the building.

But it remains unclear whether he told DCAS, a vast bureaucracy in charge of city-owned facilities, that he wanted the site to remain a health care facility.

He also said, as he has in the past, that he did not read a memo from the agency explaining the potential deed restriction change in 2015. Generally, agency memos are cumbersome and time-consuming, he said, and he has come to expect commissioners to tell him in person about issues of importance.

That strategic shift was also never explicitly communicated to DCAS, he said.

Despite the miscommunication, City Hall officials did pay attention to Rivington in 2014, when VillageCare was looking to sell because it could no longer afford to operate and AIDS residence.

Some consideration was given early on to building low-cost housing at the site, but Shorris said he opted for another nursing facility, at the urging of healthcare workers union 1199SEIU, which stood to lose nearly 300 jobs if the facility shuttered.

That preference does not seem to have been conveyed to DCAS, and once Shorris believed Allure, which purchased the property from VillageCare, would continue operating a nursing home there, he “moved onto other matters,” he said.

"Why not just pick up the phone, tell DCAS to remove the not-for-profit restriction, keep it a health care facility and move on?" Gentile asked.

"Because I believed that had happened,” Shorris answered.

He later told Kallos that he did not ever raise the possibility of lifting only the nonprofit deed restriction, since Allure is a for-profit company, while leaving the health care facility restriction in place.

City officials have maintained that Allure misled them by indicating it intended to run a nursing home at the site once it bought the building. But the Department of Investigation report said a DCAS employee did not tell City Hall that Allure intended to sell the building to a developer if the agency would not waive the $16.1 million fee.

The former DCAS commissioner, Stacey Cumberbatch, did not testify at Thursday's hearing. A Council spokesman said the office of U.S. Attorney Preet Bharara, which is investigating the deal, asked the Council not to question former city employees.

The current DCAS commissioner, Lisette Camilo, testified that the previous deed restriction process was flawed and said the city has since reformed it.

Council members pressed Shorris multiple times about who, if anyone, had been disciplined in his office, or if any lower-level City Hall staffers had been held responsible for what the administration has described as a lapse in communication that eventually led to the deed restrictions being lifted.

Councilman David Greenfield questioned Shorris several times about who had faced disciplinary action in his office.

“Someone clearly screwed up. You did your job, you told someone ‘make sure this stays a nursing home,’ and that didn't happen,” Greenfield said. “Somewhere along the way someone did not do their job, someone did not listen to you. Who was that individual or individuals? Are they being held accountable in any way?”

Shorris remained on message, stressing that all responsibility for the bureaucratic blunder rested on him.

“I believe fundamentally that accountability lies at the top,” Shorris said. “All of us, council member, there were many people involved in this. Unfortunately it took a village, and there were a lot of people involved in this.”

Councilwoman Elizabeth Crowley of Queens posed one of the questions that has yet to be answered in the various reports and hearings: “Did Allure have assurance from someone in Bill de Blasio's administration that deed would be changed and lifted before they purchased this property?”

Shorris said no such assurance was given.

Prior to the hearing, the mayor’s press office announced it has found a new site to replace the lost beds from the nursing property. The administration plans to spend $16 million for a former Department of Environmental Protection repair yard at 30 Pike St. in Lower Manhattan.

The site will be home to up to 200 senior citizens and will provide affordable housing and other health care needs. The city will issue a bid for the plan next year.